House prices inch higher in November

House prices inch higher in November

The average UK house price was £174,566 in November, taking prices to just 6% below their 2007 peak.

Prices crept up by 0.6% compared to October, according to the latest Nationwide house price index, and were 6.5% higher than in November 2012. This was the fastest pace of growth since July 2010.

Robert Gardner, Nationwide's chief economist, said: "Activity in the housing market has picked up strongly in recent months. The number of mortgage approvals for house purchases reached 66,735 in September, 34% higher than the same period of 2012.

"A large part of the improvement can be attributed to further improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers."

He added that policy measures such as Funding for Lending and Help to Buy have contributed to the improvement by bringing down mortgage rates.

He said: "Bank of England data indicates that the interest rate on two-year fixed-rate mortgages for those with a 10% deposit has fallen from 5.6% to 4.4% over the past 12 months.

"For a buyer purchasing the typical UK home over 25 years, this equates to a reduction in monthly payments of around £110 (£1,320 a year) at the current average house price."

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However, the Funding for Lending Scheme will close to residential mortgage lenders from January in a bid to prevent a housing bubble, leading to speculation that mortgage rates - and indeed savings rates - could soon start to rise.

Some property experts have welcomed the news but believe more change could be on the way for the mortgage market.

Nicholas Ayre, managing director of homebuying agency Home Fusion, said: "The news yesterday about the Funding for Lending scheme being diverted from homebuyer loans, shows The Bank of England is now paying attention to what is happening in the market more closely.

"Mark Carney [governor of the Bank of England] is starting to be the wise voice of the home-buying consumer on the street, in an effort to ensure buyers don’t over-stretch themselves. It might also be an indication that he might increase his sphere of influence further and possibly into controlling loan to values, as he did in the past, in Canada when he was in charge there."